Double dip: Spectre of recession looms again
The profession is bracing itself for a ‘double-dip’ recession in the wake of government cuts to public projects and an ongoing lack of private finance
With the value of projects starting on site falling below 2006 levels and practices reporting more redundancies, signs are emerging that the profession is to be savaged for a second time.
Although Tuesday’s emergency budget saw no more cuts to capital projects, £11 billion of project cancellations in recent weeks have done little to allay fears.
James Pickard of Cartwright Pickard Architects said: ‘The serious cutbacks in public sector construction, coupled with the reticence of banks to lend on competitive terms, will result in a sustained and steady contraction of the industry for some time to come.’
‘As the competition between architectural practices becomes even fiercer, fees will continue to be reduced pushing more technical design work offshore and reducing the number of jobs in the UK even further.’
According to industry tracker Glenigan, construction output is set to continue to drop in the health, education and community sectors until the end of 2011, and although private residential is witnessing marginal growth (AJ 10.06.10) social housing is set to decline for the next two years.
Nicholas Thompson, chief executive of Aukett Fitzroy Robinson, said: ‘I don’t believe the economy is set for a double-dip but I do believe the architecture profession is facing one.
‘Practices that didn’t suffer the full impact of the private-sector downturn will now start to experience the slowdown of the public sector as current projects come to an end and there is a dearth of new instructions.’
Last week, Austin-Smith:Lord announced it was laying off 55 staff (AJ 17.06.10) and other practices are expected to follow suit. Rab Bennetts of Bennetts Associates admitted his firm had made a handful of redundancies following the cancellation of its Bedford Station project.
‘We are bracing ourselves for a difficult few years’
Bennetts said: ‘I never believed we had come out of recession and it has got markedly worse recently.’
He added: ‘It’s going to get really tough now, so we are bracing ourselves for a difficult few years.’
The RIBA’s latest Future Trends Survey revealed the number of practices expecting workload to increase dropped from 31 per cent in April to 26 per cent in May.
Adrian Dobson, RIBA director of practice said: ‘Large practices continue to be the most pessimistic about future workloads [while] the general confidence trend in the commercial sector is now downwards.’
Glenn Howells, director of Glenn Howells Architects, said:
‘There is no doubt that yet more hard times are set to come in 2010 and beyond. There are no real surprises in the economic measures outlined in Osborne’s emergency budget, although we are still not clear as to the extent of cuts in public spending on infrastructure which will impact not only on workload for architects but the overall level of unemployment which could undermine economic recovery.
‘However, what is clear is that giving up is not an option. ‘